Resources

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction preventing the U.S. Department of Treasury from enforcing the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements.

In the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., filed by the National Federation of Independent Business (NFIB), the court found that the CTA is likely unconstitutional, as it exceeds Congress’s authority. Specifically, the court ruled that the CTA does not regulate interstate commerce and is not justified under Congress’s power to enact laws “Necessary and Proper” to collect taxes.

What Does This Mean for Businesses?

The nationwide injunction temporarily halts the enforcement of the CTA and its associated BOI reporting regulations. As a result, businesses are no longer required to comply with the CTA’s January 1, 2025 deadline to report ownership information to FINCEN. This also means that the federal government cannot impose penalties or demand compliance until further legal rulings are made on the law’s constitutionality.

While the federal government is expected to appeal the decision, and enforcement may resume if the injunction is overturned, for now, businesses that haven’t yet filed their reports are not required to do so.